Grafton expands English interests

Dublin-based builders merchants group Grafton has expanded its presence in the south of England, via an acquisition likely to add nearly 1% to its UK revenues next year.

Grafton announced yesterday that it has completed the acquisition of Crescent Building Supplies (Ruislip) Ltd, which is a general merchanting business with three branches in west London and another in Berkshire.

The company generated revenues of £10.5m (€13.2m) in its last financial year — up to the end of last March — and its takeover will improve Grafton’s coverage of the merchanting market in the south-east of England.

The group didn’t divulge how much it paid for Crescent, but Goodbody Stockbrokers has suggested a total consideration of £5m to £6m, which would bring Grafton’s total acquisition spend so far this year to an estimated £30m.

Grafton has already been active in the south-east of England this year, announcing in September the purchase of three-branch builders merchanting business, Direct Builders Merchants for an undisclosed sum.

In October, the group bought Gedimat-Ginion — a single branch merchanting business in Brussels, a deal which effectively doubled the size of Grafton’s Belgian operations.

“In our view, Grafton is best-placed to take advantage of such bolt-on opportunities in the UK as they arise, given the company’s financial strength and its size relative to peers, which means that it is not curtailed by competition issues, unlike some of its peers,” said Goodbody analyst, Robert Eason.

“Bolt-on deals have long been a core part of the Grafton strategy in the UK,” said Flor O’Donoghue of Davy Stockbrokers in a research note, yesterday.

“They add scale, cover geographic gaps and extend Grafton’s position in the merchanting sector and do so in a low-risk manner.

“The acquisition of Crescent Building Supplies, based in the London region, is another example of this.

“The business will add around 0.7% to Grafton’s UK merchanting revenues next year,” he added.

Last month, Grafton reported a 10% year-on-year jump in group revenues for the first10 months of 2014.

Approximately three quarters of the group’s annual revenues come from the UK merchanting division, which it has been strengthening with the bulk of its recent purchases.